The UK-based companies jointly announced the merger July 24, saying the deal "has the potential to create a market-leading services, investments, and construction business of considerable depth and scale."

A week later, however, Balfour Beatty abruptly announced that it was pulling the plug on the talks.

The sticking point: Carillion's "wholly unexpected decision to only progress the possible merger in the event that Parsons Brinckerhoff remained part of the potential combined entity."

Parsons Brinckerhoff is a U.S.-based engineering and design consultancy; since 2009, the New York-based multinational has been Balfour Beatty's professional services division. Balfour Beatty announced previously that it planned to sell Parsons.

Wolverhampton, UK-based Carillion was formed in 1999 when the Tarmac Group divested its support services and construction businesses. The company's integrated support services include construction services, facilities management and public private partnership project investments.

Satisfying Merger Requirements

Carillion said that its board had concluded that for the merger to satisfy its requirements, "it would be essential to retain the stability and dependability of Parsons Brinckerhoff's earnings."

Balfour Beatty said that change is "contrary to the basis upon which the Balfour Beatty Board agreed to engage in preliminary discussions."

Balfour Beatty announced May 6 that a strategic review had led it to evaluate options for selling Parsons Brinckerhoff, which it acquired in 2009 for $600 million. At the same time, the company also announced that CEO Andrew McNaughton had stepped down, effective immediately.

Reports say Balfour Beatty needs the sale to short up its finances.

Carillion 'Surprised' by Reaction

Additionally, Balfour Beatty said Carillion's desire to retain Parsons Brinckerhoff contrasts with a joint announcement on July 24 that confirmed the sale of Parsons Brinckerhoff would be unaffected by the merger discussions, as well as a presentation Carillion made July 28 to the Balfour Beatty board.

Carillion's Board said the merger requirements would count on Balfour Beatty retaining Parsons Brinckerhoff instead of selling it as the company has planned since May. Balfour Beatty said that conflicts with previous discussions between the two companies.

"The board of Carillion is surprised by Balfour Beatty's reaction as the work to date has led to increased confidence in the potential to realize very material value for the benefit of both sets of shareholders," the company said.

Balfour Beatty will proceed "in accordance with its own business plan," which will include the competitive sale process of Parsons Brinckerhoff and its search for Group CEO.

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